Lake Elsinore officials: Builder got off too cheap

The tangled history and the entitlements inherited by Laing from
an earlier developer gave Laing greater leverage in negotiating the
$1.30-a-square-foot rate for its fee, Leibold said.

"We had to deal with that baggage," she said.

In 1993, the city approved a plan by developer Liberty Founders
LLC, a subsidiary of Orange County-based TMC Communities, calling
for the construction of nearly 3,000 homes on 700-plus acres
adjacent to The Diamond, as well as several hundred acres of open
space and a golf course.

Over the ensuing years, the plan, known as the East Lake
Specific Plan, went through a number of transformations.

In 2001, Liberty filed a lawsuit against Lake Elsinore, accusing
the city and its redevelopment agency of breaching a contract and
violating development agreements. In 2002, that suit was settled as
part of a new development agreement with Civic Partners, a silent
partner of TMC that had taken over its interests in the project.
Civic Partners later entered into an agreement with John Laing
Homes for it to build the project.

Laing originally had plans to build more than 200
rent-subsidized apartment units in the development, she said. But
issues arose over the location of those units and effects they
would have on parking at The Diamond. As a result, the
redevelopment agency agreed to allow Laing to pay the replacement
fee instead of building the apartments.

Inexperience shows

City Councilman and redevelopment agency chairman Daryl Hickman
said that in a sense, the replacement fee deal with Laing deal was
a step forward for the city.

"Until recently, no developer had been charged any fees for
low-moderate income housing," Hickman said.

However, "building fees have escalated, so the $4 million we
will receive will not pay for the number of units we need to
build," Hickman said.

Hewison agreed.

"The responsibility remains with the (redevelopment agency) to
put in the 15 percent affordable housing and that cannot be done
for the $1.30," he said. He added that when the $1.30 figure was
first suggested for the Laing project, he told council members on
repeated occasions that it was too low. But no one listened,
Hewison said.

New at dealing with such a complex issue, the council failed to
grasp what was at stake, Hickman said.

"Barb (Leibold) came up with the $1.30 number," Hickman said. "I
think the council accepted it because it was one of the first
agreements of its kind and the council didn't truly understand it
until it was too late."